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A Market, So 'Natural'!

interested in the history of the development of social sciences in India, but will also be a useful source for future generations of sociologists and social anthropologists.

BOOK REVIEWapril 25, 2009 vol xliv no 17 EPW Economic & Political Weekly38interested in the history of the develop-ment of social sciences in India, but will also be a useful source for future generations of sociologists and social anthropologists.Email: ssjodhka@yahoo.comNote1 Apart from the periodic surveys of literature in the sociology and social anthropology produced by the Indian Council of Social Science Research, sociolo-gists have also published several papers, books and edited volumes on the subjects (see, e g, Oommen and Mukherji 1986; Singh 1986; Dhanagare 1993; Chaudhuri 2002; Srinivas and Panini 1973; Beteille 1973; Deb 1998; Patel 2006). Some of these issues have also been debated in the pages of journals like Economic & Political Weekly (see Das 1993; Deshpande 1994; Rege 1994) and Seminar. ReferencesBeteille, Andre (1973): “The Teaching of Sociology in India”,Sociological Bulletin, Vol 22, pp 216-34.Chaudhuri, M (ed.) (2002): The Practice of Sociology (New Delhi: Orient Longman).Das, Veena (1993): “Sociological Research in India: The State of Crisis”,Economic & Political Weekly, 28, 23, pp 1159-61.Deb, Kaushal (1998): “Teaching Sociology in a Re-gional University”,Sociological Bulletin, Vol 47, No 2, September, pp 242-49.Deshpande, Satish (1994): “Crisis in Sociology: A Tired Discipline”,Economic & Political Weekly, Vol 29, No 10, 3 March, pp 575-76.Dhanagare, D N (1993): Themes and Perspectives in Indian Sociology (Jaipur: Rawat Publications).Jodhka, S S (1998): “From ‘Book-View’ to ‘Field-View’: Social Anthropological: Constructions of the Indian Village”, Oxford Development Studies, 26 (3), pp 311-31.Oommen, T K and Partha N Mukherji (ed.) (1986): Indian Sociology: Reflections and Introspections (Bombay: Popular Prakashan).Patel, Sujata (2006): “Beyond Binaries: A Case for Self Reflexive Sociologies”,Current Sociology, Vol 54, No 3, pp 381-95.Rege, Sharmila (1994): “If This Is Tuesday, It Must be Social Roles: Sociology and the Challenge of Gender Studies”, Economic & Political Weekly, 7 May, pp 1155-56.Singh, Yoginder (1986):Indian Sociology, Social Con-ditioning and Emerging Concerns (Delhi: Vistar Publications).Srinivas, M N and M N Panini (1973): “The Develop-ment of Sociology and Social Anthropology in India”,Sociological Bulletin, 22(2), pp 179-215.Srinivas, M N (1994): “Indian Village: Myth and Reality”in The Dominant Caste and Other Essays (Delhi: Oxford University Press), pp 20-59.Payment for Ecosystem Servicesedited by Pushpam Kumar and Roldan Muradian (New Delhi: Oxford University Press), 2009; pp xvi + 308, Rs 695. A Market, So ‘Natural’!Nilanjan GhoshThe fact that ecosystems perform important functions in the socio-ecological stratum (SES) of human endeavour received late recognition. This paradigm shift in human modes of think-ing about the ecosystem was initiated in the middle of the 20th century when the negative impacts of anthropogenic activi-ties on ambient environment were increas-ingly realised. This change in the thought process saw ecosystems being factored in social and economic welfare functions. The initial view of nature being abundant and hence commanded no value has changed, and there is an increasing ackno-wledgement that markets can help in re-solving many of the problems faced by our ambient environment. Payment for ecosys-tem services (PES) has thus been thought of to serve three major objectives: first, ecosystem services have a value, and those who are responsible for maintaining and protecting the ecosystem need to be com-pensated; second, a mode of payment for the services helps in recognising the value of the ecosystem and aids in its protection; third, valuation of the ecosystem services aids in imposing financial penalties on those who pollute and degrade the envi-ronment (Ghosh 2008). There is no doubt that payment for ecosystem services is an innovative response to the management and measurement of transactions between provider and beneficiaries of environmen-tal services. PES is not only a payment mechanism but also an institutional mech-anism that it entails. The recently published volume by Oxford University Press on Payment for Ecosystem Services is indeed a valuable contribution to the literature of not only PES and environ-mental markets, but also to environmental economics as a whole. The volume has been edited by Pushpam Kumar, a well-known ecological economist, and Roldan Muradian of Tilburg University, the Netherlands. The volume has evolved out of selected papers on PES presented at the Ninth Biennial Con-ference of the International Society for Eco-logical Economics, held in New Delhi in December 2006. With two prolific ecologi-cal economists as volume editors, and with quite a few leading names appearing in the contributors’ list, the expectations from the volume are naturally high. A glimpse of the contents reveals that 12 papers in the volume are by ecological economists, social scientists, and members of non-governmental organisations (NGOs). While the variety of issues on geographical locations, perspectives, and ideas that have been dealt with makes the volume interesting, it seems that the editors have ignored the proper sequencing of the chap-ters. Rather than treating each paper as an independent entity, the editors could have created chapter clusters and divided the book into different sections. I suggest that the book should be divided into three sections: (a) conceptual/thematic issues (Chapters 1, 2, and 8, as presented in the volume), (b) methodological applications (Chapters 5, 9, 11 and 12), and (c) case studies consisting of the remaining chap-ters (namely, Chapters 3, 4, 6 and 7). The lack of proper sequencing has apparently obstructed the flow of the volume. In Chapter 1, Pushpam Kumar and Roldan Muradian have presented a lucid overview of the volume and have eluci-dated the challenges and research gaps in PES. On page 7, paragraph 2, however, there is a typographical error where it is stated that “… The tenth to 13 chapters address some of the nuances ….” As stated earlier, the volume consists of 12 chapters only, and these errors should have been corrected by the editors, or the copy editors and proofreaders of the volume. In the second and third sections of this chap-ter, Kumar and Muradian have discussed the challenges thatPES faces in becoming a driving force in rural development as well as the research gaps that it suffers from. These two sections are, indeed, illu-minating, and offer very good reading. For rural development, they have highlighted the factors that influence environmental services demand, and the impact of these factors on land-use changes; issues on information asymmetries caused by moral
BOOK REVIEWEconomic & Political Weekly EPW april 25, 2009 vol xliv no 1739hazards and perverse effects; paucity of causal models on land-use changes and ecosystem services; and problems of addi-tionalities. Under research gaps they have quite rightly identified the gaps in trade-offs analysis of land-use changes, prob-lems with identification and quantification of ecosystem services (the domain of which falls with ecologists than with economists), and institutional aspects. However, barring one or two articles on institutional aspects, this volume hardly attempts to deal with these critical research gaps which have existed in the literature on the valuation of ecosystem services ever since a seminal paper on eco-system valuation was published by Cos-tanza et al in 1997. One of the criticisms against the notion of valuation of ecosys-tem services is that by putting a monetary value to the ecosystem we are not only putting a use-value to it, but by putting an exchange-value we are also ignoring the irreversibility of ecosystem losses. Chapter 2 titled “Equity Considerations and Payments for Ecosystem Services” by Wendy Proctor, Thomas Kollner, and Anna Lukasiewicz, is a very good paper. Hinging on the crucial normative issue of equity, the paper exhibits the state of PES schemes in equity promotion. The strength of the argument lies not merely in the cited litera-ture, but also in a host of short cases from various institutional mechanisms adopted in various countries. The authors have, thus, also initiated the debate on equity versus efficiency. However, this debate is unnecessary as recent literature has al-ready stated that while equity is a policy issue, efficiency is a management concern. For PES, this principle can be kept in mind, and policymakers can concentrate on equi-ty concerns of poverty alleviation and rural development through such schemes, while on-field managers of the scheme should concentrate on efficiency of pricing and productivity. The paper also discusses a conceptual framework and a methodology for an all-inclusive approach to PES. Chapter 3 presents an institutional analysis of negotiation support systems (NSS) of the Bhoj wetlands, Madhya Pradesh, India. This paper is written by Sunandan Tiwari and Jaime Amezaga. The analytical framework has been bor-rowed from Elinor Ostrom’s institutional analysis and development (IAD) frame-work. The case approach is interesting, though theIAD framework is already age-old. A host of institutional analyses have already taken place with the IAD frame-work, and therefore, nothing new emerges from the analysis. Even for the sustaina-bility of the mechanism, the authors are merely hinting at the role of the inter-mediary facilitating body, willingness of the stakeholders, and eco-friendly approa-ches (like organic farming) – these are not new, and probably applicable for all possi-ble schemes of NSS. The authors, apart fromIAD, should also have discussed some other frameworks like socio-ecological systems (SES), to bring in the angle of socio-ecological interactions, which would have imparted some more academic rig-our to the analyses as well as provided a better understanding of the sustainability and efficacy of the NSS scheme. Choice ExperimentChapter 4, also written on Bhoj wetlands, narrates the experiences from a choice ex-periment at the site to understand the in-centives that can influence small-scale farmers to switch to organic farming prac-tices. There is no doubt that this is an in-teresting study conducted by Robert Hope, Mamta Borgoyary, and Chetan Agarwal. The paper presents an innovative sam-pling design and a robust methodology. While the authors find evidence that with the right incentives and institutional sup-port, the farmer’s land-management deci-sion-making can be changed, yet choice experiments cannot be claimed to produce sacrosanct results. This is true for all such approaches that arebased on the stated preference methods where respondents have a tendency to make claims that might not be in concordance with their actual market behaviour. Chapter 5 has viewed the entire economic valuation of crop pollination service in Kakamega, western Kenya, through such stated preference approach. Kasina, Mburu and Holm-Mueller, the authors of this chap-ter, have used the traditional contingent valuation methods (CVM) in its classical sense. While I do not have much to com-ment on the methodology which is quite acceptable in environmental economics, I cannot agree with the statement on pages 105-06, “… The economic value generated also reflects the value of pollination service from the perspective of users (consumers, growers), something that could not have been accomplished through application of Revealed Preference methods, which rely on assumptions based on observable market transactions.” The authors feel, “… This is the strength of this valuation exercise in the context of developing countries where pol-lination markets are lacking” (p 106). These arguments are as traditional as the criti-cisms against them. As I have already stated that there might be differences in human behaviour between actual markets and hy-pothetical markets, the authors’ contentions therefore seem to be a bit biased towards CVM without they really studying the nu-ances and advantages of other methods. Moreover, there is nothing new with the finding that “… educating local households impacts positively on nature conservation and especially on pollination service.” It is a well known fact that lack of education and awareness about ecosystem services has been responsible for ecosystem degradation and lack of environmental markets. Yet, what is appreciable about this study is that it has taken up two interesting payment vehicles for provision of labour or meals, though I am not sure whether this has restricted the choices of the respondents. In Chapter 6, Giupponi et al discuss the preliminary findings of a pilot study on PES in the Lashihai Nature Reserve in Yun-nan province, China. This chapter is one of the most comprehensive papers of the volume. It presents a thorough review of literature to describe the PES scheme, thereby providing an assessment of its efficacy in maintaining important ecolo-gical and environmental services. The methodology is based on the DPSIR frame-work (drivers, pressures, state variables, impacts, and responses). In this frame-work, drivers (various anthropogenic ac-tivities like agriculture, tourism, and so on) cause pressures on state variables (which might be various ecosystem services like water availability, landscape, visual quality, and so forth), eventually creating varied impacts (like water pollution, air pollu-tion, etc). Institutional responses to these impacts provide a feedback to the driving forces. DPSIR has become a popular tool in conceptualising and analysing the
r esources (for expositions, see Ghosh and that such models are better equipped to
Bandyopadhyay 2009). capture the true changes in consumer sur-
Gaehwiler et al, have presented an obje plus as compared to stated preference ap
ctive review of the economic theory un proaches. In any case, a real market will al
derlying in Chapter 8, and have in ways reflect a better value than a hypothe
ferred that mechanisms lead to the provi tical market! A sound framework has been
sion and supply of ecosystem services, defined here. However, there seems to be a
without paying much attention to the cre typographical error in equation (11.1) on
ation of demand for environmental ser page 250, where, in an attempt to
vices. This is an important observation
because there is a clear lack of under
standing and knowledge of environmental
goods and services. This has led to not
only information asymmetries on adverse
selection problems, but has also restricted
market development. This paper, in any
case, will be a good read in environmental
economics graduate courses.
Chapters 9 and 10 present environmen
tal valuation exercises again. Chapter 9
written by Nesha Beharry and Riccardo
Scarpa have valued improved coastal water
quality for beach recreation on the Carib
bean Island of Tobago, while Chapter 10
authored by Diwakar Poudel and Fred H
Johnsen analyses farmers’ willingness to
pay for agro-biodiversity conservation in
Nepal. Both the papers entail willingness
to-pay ( approaches from the con
cerned stakeholders. Both have the
strengths of their respective methodo logies.
The adorable part of Beharry and Scarpa’s
paper is the comparison of alternate ways
of addressing preference heterogeneity in
practice, finite mixing (latent class analy
sis) and continuous mixing (random pa
rameter) of taste parameters by mixed logit
models. The econometrics is sound and can
be emulated in studies of similar type. Pou
del and Johnsen, on the other hand, have
Scott et al (1998), who defines functions used to assess for conservation of
as “aspects of the ecosystem, processes crop genetic resources. They have further
that affect humans or key aspects of the attempted to analyse the factors affecting
ecosystem itself... the purposes of the While this has qualified well as a mas
processes” while services are “attributes ters’ level dissertation, and has methodo
of ecological functions that are valued by logical rigour, I still stick to my initial criti
humans.” In that sense, functions occur cism of such studies where I am appre
biologically and chemically in ecosystems, hensive about the awareness levels of the
regardless of human presence, while servi respondents to fully appreciate the agro
ces are based on human needs, uses, and ecosystem and put a value to it.
preferences (Hawkins 2003). Proctor et al, Ayele Gelan’s paper (Chapter 11), “A
however, in future extensions of this work Travel Cost Analysis of Non-Market Bene
can think of extending their models to fits of Forest Recreation in Great Britain”, is
check for how the valuation framework the only paper in the entire volume that
will unfold under credit trading scheme, discusses a revealed preference approach
possibly for scarcity values of water to the valuation of ecosystem services. I feel
BOOK REVIEWEconomic & Political Weekly EPW april 25, 2009 vol xliv no 1741presume that the literature survey is some-what incomplete. On page 269 the authors have inferred that tourism is not “import-intensive, (thereby) making it particularly attractive to developing countries/back-ward areas”. The authors seem to be ob-livious of the fact that there is a strand of literature on “global commodity chains” on ecotourism (e g, Uddhammar 2006) that links up a domestic economy with the world economy. As Uddhammar (2006: 662) puts it, “… The commodity marketed in the ecotourism business is typically a ‘glocal’ service, being both global – visit-ing world-renown protected areas thou-sands of kilometres away – and local – with local entrepreneurs, small-scale lodges and camping sites, local wildlife and rugged nature.” Internationally, there is competition to tourism as well. Willy-nilly, I agree with taking consump-tion expenditure as a measure of human well-being, as it is difficult to come up with income figures in surveys. However, I am confused with the authors’ rationale on conducting the surveys simultaneously in a study village and a control village. Survey-ing the control village in this study is quite unnecessary as the ultimate aim is to ob-tain the difference in the well-being of population participating in tourism and in the well-being of those not participating in tourism. This hypothesis could have well been established with a control population (or sample) in the study village (which is not participating in tourism activity). On page 281, they have acknowledged …As tourism is absent in the control vil-lage, a comparison between ‘direct tourism participants’ and the ‘rest’ can be done with the sample HHs (households) from the study village only.The control village, thus, looks like an undesired appendage in the entire study, with its utility confined to increasing the sample size. On page 290, again there is a typographical error. This time a non-existent table (Table 12.10) is described. I presume that in place of Table 12.10, the authors were explaining Table 12.9, which consists of household characteristics across categories. The section on the link between tourism and conservation is weak. It has not only failed to show solid empirical evi-dence between the two critical variables, but it has even failed in its attempt to suggest any indicative hypothesis. On the whole, this study is merely an empirical attempt with statistical soundness of survey design and some bits of elementary econometrics, without really contributing much to the literature on the development – conservation – tourism nexus. My final comments …PES, as a theme, is central to the envi-ronmental economic problem. There have been doubts and debates on its utility, appre-hensions on the methodologies, and con-cerns about its application. There are de-bates still going on whether there should, at all, be markets for the environment! Yet, that has not deterred the growth of litera-ture on and development of new method-ologies for the evaluation of the ecosystem. Decades of cognitive dissonance, bitter debates, and scholastic antagonism have catapulted us to where we stand now. The recent expansions of markets for en-vironmental services suggest that they may rapidly become a central point of sustaina-ble development financing that could be tens of billions of dollars annually within the next 10 to 15 years. The enthusiasm has been picking up to the extent that even com-modity exchange promoters have been thinking of trading natural capital on deriv-ative exchange platforms. All these moves towards markets have been triggered by two major drivers that include conscious national environmental policy movements towards market-based instruments, and ris-ing demand for environmental goods and services from public authorities, private entities, and consumers. On the one hand, there are new public regulations along with the establishment of market-based instruments, and on the other, it has become quite lucrative and fashionable for private players to show initiatives to-wards efforts of biodiversity protection. Consumer demand for derivatives of healthy ecosystems, such as organic foods, fair trade products, and eco-tourism, has also increased over time. Its positive inci-dence on human health and overall wel-fare is also being steadily documented. Market institutions make the common man understand the value of the services that the ecosystem provides to the economy as a whole, the incidence of economic activ-ity on the ecosystem, and finally, its possible repercussions on the quality of life. This dictates the supply-side phenomenon of an economy, including human health, welfare, and eventually, labour markets. At the same time, trade in ecosystem services has the potential to become the new growth indus-try. Areas and projects where such trade is possible are likely to generate significant secondary benefits, such as eco-tourism, with multiplier effect on incomes and employment. The potential for synergies among various initiatives, therefore, are plenty. Not only can an economy fulfil its obligations under the various environmen-tal conventions to combat desertification, biodiversity degradation, and global climate change, but the possibility also exists on en-gaging various rural communities in formal market transactions, reducing thereby the extent and magnitude of poverty. Overall, the editors have done a com-mendable job by collating papers of vari-ous genres and schools of thoughts. I have my agreements and disagreements with several papers in this volume. My agree-ments have emerged out of appreciation, and disagreements out of cognitive disso-nance. Looking at this book from the vari-ous perspectives of academic research, policy implications, and informed debate at various forums, I must admit that Kumar and Muradian have been successful in fulfilling their mandate.Email: Nilanjan.ghosh@taerindia.comReferencesCostanza, R, R d’Arge, R de Groot, S Farber, M Grasso, B Hannon, K Limburg, S Naeem, R V O’Neill, J Paruelo, R G Raskin, P Sutton and M van den Belt (1997): “The Value of the World’s Ecosystem Services and Natural Capital”, Nature,387: 253-60.Ghosh, N (2008): “A New Look at Integrated Water Resources Management (IWRM) from the Pers-pective of Scarcity Value of Water Resources”, Resources, Energy and Development, 5 (1): 27-48. Ghosh, N and J Bandyopadhyay (2009): “A Scarcity Value Based Explanation of Trans-boundary Water Disputes: The Case of the Cauvery Basin in India”,Water Policy, 11 (2): 141-67. Hawkins, K (2003): “Economic Valuation of Ecosystem Services”, mimeo.Maxim, L and J Spangenberg (2009 forthcoming): “Disciplines of Interdisciplinarity: A Comparative Approach of Conceptual Backgrounds for Integra-tive Analytical Frameworks” in J Spangenberg and N Ghosh (ed.), Indicators and Scenarios for Sustainable Development (New Delhi: Oxford University Press). Scott, M J , G R Bilyard, S O Link, C A Ulibarri and HEWesterdahl (1998): “Valuation of Ecological Resources and Functions”, Environmental Man-agement, 22 (1): 49-68.Uddhammar, E (2006): “Development, Conservation and Tourism: Conflict or Symbiosis?”,Review of International Political Economy, 13 (4): 656-78.

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